ASX 200 drops 148 to 5818 (-2.5%). Solid volume too. Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News

 

The ASX 200 dropped 148 points to 5818 (-2.5%) on the news from QAN and the increasing spread of CV19 in some parts of the world.

Dow futures down 150 points. A drop on the open and buyers stepped back in but were sent packing following the job vacancy numbers shocking investors. The QAN equity raise coupled with the loss of 6000 jobs in the international business was a shock. The update on flying restrictions snuffed out any optimism in the travel sector with heavy losses to FLT, WEB, CTD and HLO. The ugly truth on getting travel back to normality collided with stimulus hopes. Banks under pressure again as the Big Bank Basket dropped to $121.23 and CBA down 2.3%.

Other financial sales under pressure led by MQG down 3.6% and MFG down 5.2%. AEF continued its fall from grace down another 10.9%. Miners too under pressure with BHP down 2.4% and FMG down 2.6%.

No luck either for gold miners despite a modest AUD rise in bullion, NCM down 3.0% and NST falling 4.2%.

Energy stocks ran out of juice with WPL down 4.2% and STO falling 3.4%. In the industrials some safe havens held up with WOW doing well as hoarding comes back in fashion, down 0.2%.

Bond proxies fell like SYD 6.2% on QAN news too, whilst consumer discretionary fell hard too as ALL dropped 3.4%. One bright spot was healthcare, CSL announced an acquisition from uniQure and rose 0.6%, RMD continued to grind higher as infection rates rose finishing up 0.3%. REITS falling ahead of dividend periods with GMG down 2.4%. In tech stocks, we saw falls in APT down 4.1% and XRO down 2.0%

The All Tech Index fell 3.0% with NXT down 4.5%. The big news in corporate land was the $1.9bn capital raise at 365c, job losses and international travel restrictions hurt sentiment , AX1 rose 9.6% after a strong business update, RBL blew its own bubble after another strong update finishing up 25.5%, BAP outperformed after a better than expected update falling only 1.7%. FNP is holding a conference call later tonight to try to explain its loss of two senior executives. The 10-year bond yield fell to 0.87% and the AUD around 68.67%. Asian markets slide with Japan down 1.2% though China closed for Dragon Boat Holiday. Hong Kong down 0.5%.

Today’s Highlights

  • ASX 200 drops 148 to 5818 (-2.5%). Solid volume too.
  • High 5938 Low 5818. QAN outlook hurts. Closing on lows.
  • Big Bank Basket smashed to $121.23
  • All Tech Index down 3.0%
  • 90 trading days until the US election.
  • Dow Futures down by 160 points.
  • 10-year bond yields fall to 0.87%
  • AUD slips to 68.67c
  • Aussie gold rises to $2565.
  • Bitcoin falls to US$9111.11. Looks like an emergency. Or a car.
  • Asian markets slide with Japan down 1.2% though China closed for Dragon Boat Holiday.

STOCKS

  • FNP -conference call tonight. Getting interesting.
  • FLT -11.02% CTD -8.00% WEB -8.63% travel stocks in quarantine.
  • FXL -10.91% broker downgrade.
  • PRN -8.49% ceasing to be a substantial shareholder.
  • PBH -8.23% US restrictions tightening.
  • OML -8.82% change of director’s interest.
  • CGF -6.96% capital raising weighs.
  • AX1 +9.56% business update.
  • RBL +25.48% Business update.
  • BGL -8.90% profit taking after good run.
  • MMM +11.27% release of restricted securities.
  • PNV +4.07% defensive buying.
  • HTA +5.71% merger all going through.
  • SPT -11.66% profit taking.
  • ALG -12.22% Texas issues.
  • IMD -10.17% change in substantial holding.
  • BWP +2.55% In Bunnings we trust.
  • KSL -3.23% divestment of Esiloans portfolio to Nationwide Microbank.
  • Speculative Stock of the Day: Two today Nex Exploration (NME) +87.5% and Metalicity (MCT) +107.14%. Spectacular drill results in the JV project. Results from assays for the first 11 holes of a 44-hole initial program, which has confirmed significant and extensive high grade, near surface gold mineralisation at the Leipold Prospect. 33 drill holes are pending results which are due for release in the coming weeks.
  • Biggest Rises: AX1, HTA, ALK, FCL, MAH, PNV, CEN and IFT.
  • Biggest Falls: PAR, FLT, AEF, FXL, BGL, OML, WEB and PRN..

TODAY

  • Orocobre (ORE) -1.95% Expects June quarter sales volume of 1.6Kt of lithium carbonate priced at $4,015/t free on board (FOB), which excludes insurance and freight charges. At Olaroz, maintenance scheduled for August will be brought forward to late July/early August. Expenditure on parts and equipment is anticipated to be less than $1m.
  • Bapcor (BAP) -1.70% Guides FY20 underlying NPAT between $84-88m vs consensus $85m. Expects FY Burson same store sales growth of 5% vs year ago. Retail segment has experienced strong demand in May and June, with Autobarn same store sales up 45% vs year ago. On a full year basis to the end of June, it is estimated Autobarn same store sales increase will be 8% vs year ago.
  • Qantas (QAN) – Announce $1.4bn institutional placement and $500m as SPP priced at 365c/share. Costs reduced by $15bn during three-year period of lower activity. $1bn in ongoing cost savings per annum from FY23. Around 100 aircraft to be grounded for up to 12 months. Continuing stand down for 15,000 employees, particularly those associated with international operations, until flying returns. The group expects to report a FY result between breakeven and a small underlying profit before tax (PBT). Forecasts FY asset impairment charge between $1.25- 1.4bn, mainly relating to the carrying value of its 12 Airbus A380s. The board has decided to revoke the interim dividend, avoiding the outflow of $201m of cash and helping to maintain strong liquidity.
  • Accent Group (AX1) +9.56% Guides FY20 EBITDA up 10% to $119.8m vs prior year’s $108.9m. Total year to date sales (including TAF franchisee sales) for FY20 of $923m. Adjusted Like for Like Sales for FY20 up 1.6%. Reports successful negotiations with landlords.
  • Asaleo Care (AHY) -0.50% To withdraw from the baby diaper category in New Zealand as it raises focus on its core brands in the higher growth & margin personal care and B2B businesses. Repeats FY guidance of Underlying EBITDA in the range of $84 – 87m.
  • South32 (S32) –3.90% There are reports S32 make be looking to sell its Cerro Matoso nickel mine, which is valued at more than $1bn. The article also speculates S32 could be a takeover target for Fortescue Metals (FMG).

ECONOMIC NEWS

  • The number of job vacancies in Australia decreased by 43%over the May 2020 quarter, the largest fall on record, according to new seasonally adjusted figures from the ABS.

SEASONALLY ADJUSTED ESTIMATES

  • Total job vacancies in May 2020 were 129,100, a decrease of 43.2% from February 2020.
  • The number of job vacancies in the private sector was 111,200 in May 2020, a decrease of 45.0% from February 2020.
  • The number of job vacancies in the public sector was 17,900 in May 2020, a decrease of 28.9% from February 2020.

COVD-19 NEWS

  • Codelco’s Chuquicamata copper mine in Chile will shut for two weeks to undertake a cleanse.
  • Victoria recorded 33 cases in the past 24 hours to Thursday morning, New South Wales had four cases.
  • Beijing reported 13 additional local coronavirus cases. South Korea reported 28 new coronavirus cases in 24 hours.
  • In Nevada it is now compulsory to wear masks.
  • The Democrats have now told people to stay home from its gathering in Milwaukee.
  • South Africa reported a record 5,688 new cases, bringing the total to 111,796.
  • Forecasts now for 180,000 virus deaths in US by October.

BONDS

ASIAN NEWS

  • Chinese economy gradually recovering. Gradually being the word. The Bloomberg early indicator tracker is below. Uses metal prices, PPI, confidence surveys etc.
  • Masayoshi Son said he’s departed the board of Chinese e-commerce group Alibaba Group. Alibaba co-founder Jack Ma himself recently quit the SoftBank’s board.

EUROPEAN NEWS

  • In the UK, Housing Secretary Robert Jenrick, is under fire after it emerged that he approved a planning development from a UK businessman who later donated money to the Conservative Party. Yet another headache for Boris.
  • Plenty of data tonight from regulators in US with stress test results due on banks.
  • US Airlines raise $10bn in a week. You can add QAN to that too.
  • Bayer to settle US lawsuits for US$10.9bn.
  • Wirecard again in the news.

And finally……

Teacher: “If I gave you 2 cats and another 2 cats and another 2, how many would you have?”
Johnny: “Seven.”
Teacher: “No, listen carefully… If I gave you two cats, and another two cats and another two, how many would you have?”
Johnny: “Seven.”
Teacher: “Let me put it to you differently. If I gave you two apples, and another two apples and another two, how many would you have?”
Johnny: “Six.”
Teacher: “Good. Now if I gave you two cats, and another two cats and another two, how many would you have?”
Johnny: “Seven!”
Teacher: “Johnny, where in the heck do you get seven from?!”
Johnny: “Because I’ve already got a bloody cat!”

Q: What did the duck say when he bought lipstick?
A: “Put it on my bill.”

Brunette: “Where were you born?”
Blonde: “The United States.”
Brunette: “Which part?”
Blonde: “My whole body.”

Thanks laughfactory.com

Clarence

XXXX

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Financial Markets and Political Commentary